Question

Lauer Corporation uses the periodic inventory system and has provided the following information about one of its laptop computers: Date Transaction Number of Units Cost per Unit 1/1 Beginning Inventory 220 $ 920 5/5 Purchase 320 $ 1,020 8/10 Purchase 420 $ 1,120 10/15 Purchase 260 $ 1,170 During the year, Lauer sold 1,050 laptop computers. What was ending inventory using the FIFO cost flow assumption

Answer 1

Answer:

$198,900

Explanation:

Ending inventory units = Available units for sale - Units sold

Ending inventory units = 220 + 320 + 420 + 260

Ending inventory units = 1,220.

Units sold = 1,050.

Ending inventory units = 1,220 - 1,050

Ending inventory units = 170

As per the FIFO cost flow assumption, sales comprise of units from beginning inventory and earlier purchases. Hence, ending inventory comprises units from latest purchases.

So, ending inventory of 170 units would be valued at the price from 10/15 purchases.

10/15 purchase price per unit = $1,170

Ending inventory value = 170 units x $1,170

Ending inventory value = $198,900